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220502_Episode 59_

Dr. Chris Martenson [00:00:00] Diesel shortages and price spikes are racking the United States as well. Food shortages for the globe are on the way. This is absolutely essential information you need to know about. Come on, let’s go take a look.

Dr. Chris Martenson [00:00:20] Hello, everyone. Dr. Chris Martenson here with a very important update for you listeners. You know, or maybe you don’t know if you’re new to my channel, but as I was reporting on COVID for all of all of 2020 through the spring of and all through 2021, through all of that reporting, very often I would end my reports with the encouragement, the invitation to plant a garden. Now, why was I doing that? It’s because I could clearly see that we were going to have supply chain shortages coming. You can check my work. I was talking about this in spring of 2020. Hey, now it’s spring of 2022. And the shortages are really they’re on everybody’s radar now. So if you like being early, hey, this channel is for you. So I love being early to these things because you can prepare and you have the opportunity to become mentally adjusted to this information before it comes and blindsides you.

Dr. Chris Martenson [00:01:11] So let’s go right to it and talk about this. Let me switch over to my picture in picture. Episode 59 Here we are.

Dr. Chris Martenson [00:01:18] Shortages are real. They’re about to get worse. We’re going to start with this idea of diesel fuel. This is diesel in the United States. So we’re going to get my drawn to a lot here because, you know, I love my drawing tool. So we had this price spike back here. Why am I pointing this one out? Because this was 2008. Remember, we had this housing bubble back here in 2000 through 2007 and then it burst. Right. And it was legendary how bad this housing bubble was. In fact, part two of this, back at Peak Prosperity. I’m going to be talking about how I think we have the worst real estate crash in our history is coming. And that’s not just for people here in the United States listening. I think people in Europe, Canada, New Zealand, Australia also need to be aware of this particular dynamic because.

Dr. Chris Martenson [00:02:03] We have multi-decade policy errors that are coming home to roost right now, courtesy of all of our central banks. They have really done a bad job in one of the policy errors was to print, print, print, print, print, print, and then put all that printed money out of circulation. That gives us normally inflation. So that’s what we’re seeing in part. But this is different.

Dr. Chris Martenson [00:02:24] This is a structural shortfall in the amount of oil that we have available to put into refiners. There’s a shortage of refining capacity. There’s a shortage of you name it, and it’s combining to create this. And look at this price spike that we are seeing right here, right now. I’ve never seen anything like this. I’ve been observing these markets for a very long time. That is astonishing. And as a reminder, it’s never the destination that gets you. It’s the pace of change. Right. Skydiving is fine, except for that last six inches. If your parachute doesn’t open, the pace of change is what kills you.

Dr. Chris Martenson [00:02:58] So in this story, that pace of change that we are seeing right there in the price of diesel is going to have enormous ramifications. And unfortunately, we can’t predict what those are yet.

Dr. Chris Martenson [00:03:09] So let’s go right to the data. You don’t me. I like data. Why is wise why are prices spiking like that in the United States? So this is a nightmare. Let me pull this up a little higher so you can see it down here because it’s a little bit hidden down at the bottom. So this is the link down here. This is EIA. That’s the Energy Information Agency of the United States government puts out really, really very useful data all the time. One of the better government agencies out there in terms of giving you data you can use. And this is their weekly supply report.

Dr. Chris Martenson [00:03:39] So we’re looking at different weeks starting here in it’s March 18th, coming through week by week by week, ending in the week of April 22nd. So pretty current report here, waiting for the next one. There’s a lot of other data and tables up here. I’ve stripped it all out. We’re just focusing here now on distillate fuel oil. That’s diesel. And so what we see here is this 15 parts per million sulfur that’s low sulfur, diesel fuel. That’s the stuff that go into trucks. That’s the stuff that makes the world run. That’s what brings all the you click you order from Amazon. Hey, that big brown truck of happiness rolls up your driveway and that’s courtesy usually of a lot of shipping that had to happen and that’s courtesy of low sulfur diesel fuel. So back here on March 18th, notice that the supply that we had in the stocks that we had was 102 million barrels, went up 203 that next week, then 104. So we’re going in the right direction. And all of a sudden it went down to 101, then 97, then 96 or close to 97 there. So stocks of this are falling, but it’s not evenly distributed. So there’s supply shortfalls regionally in the United States. And that’s what we’re actually looking at right here on this one, because this is telling us that we have a daily average fuel price for diesel across the United States, which is averaging here at $15, $5.18, $5.19 a gallon. But it varies a lot. In fact, if we look at how it varies, we can see here on this chart, it varies anywhere from a high of $6.43 per gallon on average in California, which, by the way, which is where a lot of products ship in through, say, Long Beach, other ports like that as well, very, very high up through the East Coast. That purple region up there, up from Pennsylvania and New Jersey on up through New England, in New York, all of that. So you see very high prices there as well. So what’s happening here? Why do we have such high price spikes up there in that purple region or out there in California? Well, now, California’s always got its own story. It’s always more expensive than everybody else. That’s the price of living in Utopia, I guess. But up here on the East Coast, there is a legit shortage of material up there. So we’re out of capacity in the pipelines to be able to deliver it. A lot of the material that the that the New England area brings in that northeast region brings in is from ships coming in. So the New York Harbor freight price for this is ridiculously high. Diesel is very, very expensive. So hey, so what? So what you say. So diesel is expensive. What does that mean? Who cares, right?

Dr. Chris Martenson [00:06:27] Well, it matters a lot because our economy is actually a very complex system. And when the input costs spike suddenly into a complex system, you can’t really predict what’s going to happen next because it’s a complex system. It doesn’t have predictable behaviors because it’s a complex system. It has emergent behaviors. So we’re going to have to sit back and watch and see what happens, what emerges out of this complex system when it gets shocked for fuel and the price of fuel is really that’s what we get shocked by is, oh, my gosh, you know, $5.80 a gallon. Right. But what that’s really telling us is there’s a shortfall of that fuel. And so the way you balance a supply and demand equation is with price. So the price has to rise up enough to make sure that supply and demand can actually balance out there. All right. So let’s go back in here and take a quick peek.

Dr. Chris Martenson [00:07:25] So East Coast, U.S. diesel shortages, those are the things we have to worry about most years again. Javier Bloss on Twitter on April 28th was writing “Well, today was quite something physical. New York Harbor Diesel, that’s where it’s being imported through those ports, has jumped to a record high of 534 cents per gallon. That’s about an equivalent of $225 a barrel. So what we’re talking about here with New York Harbor Diesel. This isn’t stuff at the pump where it’s ready for you at the retail level to put into your fuel tank. This is wholesale pricing. So at the wholesale price, when you see a wholesale price at New York Harbor Diesel, a 500 $0.34 per gallon, that’s equivalent to as if the price of oil was already $225 a barrel.” That is a shocking number. So as he closes there, quote, “diesel is the workhorse of the global economy.” It is absolutely true. It’s the workhorse if you want to have earth moved, if you need an excavator to dig out a foundation, if you want heavy equipment to do anything, if you want. In many cases, most cases fields to be plowed by tractors if you want long haul shipping to be accomplished either by diesel locomotive or diesel truck. Diesel. Diesel. Diesel. Diesel is the workhorse of the economy. So when diesel prices rise this much, it’s speaking to a relative shortfall.

Dr. Chris Martenson [00:08:58] What happens when you take a complex system that owes all of its beautiful complexity to the throughput or flow through of energy, and you pinch off some of that energy. Hey, guess what? You end up with a simpler economy. It’s how complex systems work. So what’s all that mean to you? It simply means you need to be prepared for this idea that the economy is about to get simpler, which is a euphemism for it’s going to begin shedding unnecessary parts. Which parts get shed? That’s a cultural decision. Obviously, it would make sense if the highest value things were preserved in the lowest value, things were jettisoned. But as we know from, say, Easter Island, there was the apocryphal story. So it goes. The islanders chose to use their last remaining trees, their last vital resources, erecting stone heads, because that was important to them. Who knows what we’ll consider important? We may decide, you know, that some farms, maybe we’ll just let them go under because they can’t afford diesel. But we’ll subsidize coast to coast flights because our culture is decided. That’ll be our stone head, right? Equivalent. We think that people being able to fly cheaply from L.A. to New York is very important. But we might jettison something really, actually important in that process. That’s my concern. But for now, just hold on to this idea. The diesel shortage is very real. These price spikes are very rapid. And when you put those two pieces together, some things are going to happen, which, again, we can’t predict. It’s going to be pretty astonishing. So perhaps you’ve heard President Biden said, hey, we’ll just release some oil from the Strategic Petroleum Reserve. It’s a little bit helpful, but it’s really a drop in the bucket. Where did it go? Where did that oil actually go? It turns out about 60% of it went to refiners. So that was taken up by U.S. refiners and refined in the United States and those products mostly consumed in the United States, although sometimes they ship those out. International oil companies, IOCs took up about a quarter of it or exactly a quarter, 25%, and then 15% went to traders. I don’t know where the traders are going to go with that. So these traders may be sitting on it for speculative purposes. These traders may have been trading it to other companies. I don’t have insight to where that went, but I think it’s fair to say that the Strategic Petroleum Reserve wasn’t released to the world necessarily. A lot of it stayed right here in the United States doing the things it’s going to do.

Dr. Chris Martenson [00:11:26] And another component of this that I want to focus on is this stuff called kerosene, which is a jet fuel. Jet fuel is a very different thing from diesel. And so if we look at it, other fuels, unfinished oils, asphalt engineers, kerosene type jet fuel, here it is all the way up. So we see here there’s no shortage here. We had 36 million barrels here, 36, 35, 34, nine. So call that 35, 35, 35. Nothing happened. That’s very stable. Stocks is being used all the time. It’s being replenished all the time. 36, 36, 35, 35, 35, 35. What’s the problem, Chris? Well, the problem is this. It’s not evenly distributed again. So U.S. East Coast jet fuel stockpiles lowest on record. And these records go back to 1990. So jet fuel, lowest on record. What does that mean? It means the price is kind of also go. To a record in this story. Back there in the nineties, there were vastly fewer airplanes operating. So you can’t really just compare the amount that we have in stockpiles now compared to then because of course, back then we didn’t need nearly as much. So this is interesting here. They say jet fuel supplies in the East Coast have never been lower despite producers boosting output. So the refiners have actually shifted their output, dialing back diesel and tuning their refining process to produce more of this kerosene, jet fuel because we need it. Inventories for the region, they say here are at a historic low in government data going back to 1990. Nationally, stockpiles are at their lowest on a seasonal basis since 2004. Meanwhile, implied jet fuel demand based on a four week average rose to within 7% of 2019 levels, which are records last week as more Americans return to air travel. So hey, guess what? Economy is back. People are being in travel again. COVID is over. Remember I told you in December 2021? Omicron Within a couple of weeks of coming out, I said, Omicron spells the end of COVID because why? It’s well, it’s really not all that serious of a disease. So a lot of people have caught on to that, hey, the mask mandate and planes just got lifted. So guess what? A lot of people are flying again and the country is having a hard time keeping up with demand for that jet fuel. But this isn’t like we’re going into brand new all time record highs. We’re just within 7% of recent all time highs. Wasn’t any problem producing that jet fuel back in 2019. Now there is. So what is going on here? This is really important because what we’re going to see is really large knock on effects to the economy.

Dr. Chris Martenson [00:14:14] Now, a lot of reasons why we need to understand that. But one of the things that’s driving me a little bit nuts here is that as we come into these incredible emergencies in energy and by the way, energy is not just a commodity corn, cotton, soybean, silver, tin oil. No, it doesn’t work that way. Oil is the master resource. Energy is the capital letters master resource. Everything else is derivative of that. If you have diesel, you can plow your fields, you can have food. Food’s a derivative of diesel, right? Everything’s like that. If you want to mine copper first you need to put the diesel in the giant excavators and the giant mining trucks. And if you have that diesel, if you have the oil, then you can have the copper and the copper or all that, right? So so energy is the master resource. Oil is the king of those master resources. So this is why kind of shocks me when just after us I boy.

Dr. Chris Martenson [00:15:18] So this is an opinion piece written by Daniel Yergin. Of course, you run a won a Pulitzer Prize for writing a book called The Prize, which is about oil. He should know a lot about oil. He completely I’m at odds with him all the time. I think he gets it completely wrong. He’s writing this op ed. Obviously, I picked a couple of pieces out. And in these pieces he says, quote, Completely severing Europe from Russian energy, though, will depend on skillfully managing the resulting energy shortages and turbulence. No, no, no. I don’t have any bones to pick with that. I’m in complete agreement. If Europe is completely severed from Russian energy, there will be energy shortages and turbulence, although turbulence is something that you can maybe survive and come out exactly the same as when you went into it. Like planes enter turbulence and they leave turbulence none the worse for the wear except for some scared passengers. Right. Well, when you have an energy shortage, you get more than turbulence. You actually get destruction of certain things. So I’m going to disagree with just the implication that we just manage this little turbulence. And that’s all right. That’s not the case. It’s going to be much more serious than that. If you’re listening to this from Europe, you have to be prepared for the fact that your entire economy is going to be in deep, deep trouble if it’s not already in deep, deep trouble. If Russia cuts out even more or somehow Europe decides not to use Russian energy supplies, that’s coal. That’s oil. That’s natural gas. There will be the equivalent of dark ages, economic dark ages coming to Europe to continue here, quote, to succeed requires something that until now has been largely missing, collaboration between government and industry. And here’s where Daniel and I go completely off in separate directions. What does he mean to succeed?

Dr. Chris Martenson [00:17:04] To succeed means like, oh, well, we’ll we’ll just this is just something to manage. One does not manage a loss of the master resource. That’s not how this works. One does not simply manage that. There’s nothing to succeed at here. If you don’t have the energy, all sorts of derivative things don’t happen. Trucks don’t truck, trains don’t train, planes don’t fly. Things don’t ship. Stuff doesn’t get made when that stuff doesn’t happen. That’s not turbulence. That is destruction, supply, destruction, and ultimately demand destruction and ultimately job destruction and ultimately economic destruction. This isn’t that hard. That’s how this works. All right.

Dr. Chris Martenson [00:17:49] So but what if government and industry just collaborate? We should. We can succeed. Nope. Not how this is going to work to carry on. Quote “With such cooperation, sanctions against Europe bound Russian oil might just be manageable. According to our figures, about half of Russia’s seven and a half million barrels per day of crude and product exports go to Europe. So that’s 3.25 million barrels a day. That’s not something you manage with little turbulence. To succeed at, okay, meeting about 35% of total demand, that’s a third a third of all of the demand of Europe, which is already fairly energy efficient. Way more energy efficient than the United States. Than Canada. Australia, for sure. All those places. Right. So already energy efficiency to take a third away is going to do so much damage. And people need to know that. You need to be aware of that because even if you’re not in Europe. This will spill over and have other effects. It’s going to be very hard to escape the impacts of this globally, I would imagine, once this once this happens. To carry out here, quote, President Biden’s recent announcement of a huge release from the U.S. Strategic Petroleum Reserve was a major step to help offset shortages. Yeah, but remember, not in Europe because those IOCs and by the way, those aren’t necessarily European IOCs. Those international oil companies, they just got a little piece of that. So that 25%, I’m not sure really went a long way to solving anything. It might have helped. I’m sure it didn’t hurt, but it didn’t solve anything. Let’s be clear about that. So, at any rate, what I dislike, what do I just like? So so this particular concept here, what I don’t like about it is that it’s implying that, well, if we just have governments and industry managing stuff, we can succeed at this just a little turbulent. No, it doesn’t work that way. Once you understand the role of energy in the economy, it is the lifeblood of everything. Now, if you had a farm, if you had a factory, if you were a long haul trucker or shipper in some way, if you were in any way intimately connected to the reality of life, you would know. It’s obscene to suggest that, well, I’ll just run my farm with one third less diesel. I’ll just run my trucking company with one third less diesel. I’ll just run my planes with one third less jet fuel. It’s it’s fantasy territory. And what what scares me is that there are very well-meaning people spinning these fantasy tales. If I wrote what I just said in an op ed, it would never get published. But if you publish something that sort of is pleasing to the powers that be, which says, you know, if we just had better cooperation between industry and government, we could succeed. You get printed all day long because of course, you’re confirming the biases of the people already in power and in charge. You don’t want to think about things from a reality based standpoint. They prefer narratives, and I get it. So it’s their show. All right. At any rate, what are we going to see? The implications of this are going to be enormous. Really, really enormous. So let me get there real quick while I still have time with you. First, we’re going to see lower economic activity as a result of spiking energy prices. This was the recent high. This is the Purchasing Managers Index of purchasing managers are polled. They’re asked a question, a series, lot of questions. And one of them was like, hey, how are things going and how do you see the future going and all of that. So it combines into an index. They felt very, very positive back here in 2021. But since then, obviously, we’ve seen a pretty big erosion. Now, are we at crisis levels now? Crisis is somewhere below this 50 mark is pretty bad. You don’t want to be below there. So we’re still still some positive territory here before we get there. But clearly, already we’re seeing an erosion of the perceptions of the purchasing managers. Who are those people in that long supply chain of corporate activity who are very important in keeping us supplied with all the things we know and love and call part of our modern life. So purchasing managers eroding a little bit, not yet in danger territory. But we’re starting to see down here. Financial markets dove as tech stocks slump and recession fears mount. The United States just recorded a negative period of growth, so economists put it negative growth anyway, a recession. The economy went backwards, not forwards. Right. It shrunk. It didn’t expand. So we’re already seeing these recession fears mount. And again, let me back up here. This is very, very, very recessionary, seeing price spikes like this. Why? Because it’s the pace of change that gets you. It’s not the destination. If we went to $5 a gallon over ten years, that’s very different from going to $5 a gallon from 350 over ten weeks. These are very different scenarios. So the pace of change, obviously, is the thing that’s most likely going to create recessions in this story. That’s something that shocks the system as well.

Dr. Chris Martenson [00:22:54] I just need you o understand. Don’t bother seeing if you can resolve that picture. We have a complex economy and because of that, it has unpredictable economic behavior. So that little box down there just says, look, it’s a complex system. When we give it lots of energy, we can’t predict what’s going to happen next. It it might decide to make Tesla cars in a complex economy, may decide to go to Mars. It may decide to create little Beanie Babies, whatever. It’s going to do what it does because it has ample energy. The corollary inverse flipside of that is when you start of a complex economy for energy, it begins to jettison parts. And again, we can’t predict those necessarily what those are going to be. I hope I hope we prioritize keeping our hospitals well-stocked and functioning and food and the basics in life that help us survive and live and thrive and all of that. But we can’t help. There’ll be decisions made and in particular there’ll be political decisions made and it’s an election year. So I’m inclined to expect us to do some dumb things. We’re going to jettison some dumb things and preserve some dumb things, and we should be doing the opposite in many cases. So what happens?

Dr. Chris Martenson [00:23:58] What is the worst unpredictable outcome of starving an economy for energy? What if all of a sudden right now Europe had to make do with 35% less energy? I’ll tell you what happens next. You get what’s called systemic financial collapse. Now, the problem with the story that we’ve been running here for so many years is a story of continued printing by the central banks. They printed and they printed more. If you really want to know where this story went off the rails. It went off the rails in 1987. It was a market crash. It felt very scary at the time. Alan Greenspan, then chairman of the Federal Reserve, said, I have to do something and implemented the famous what’s called the Greenspan put a put meaning putting a floor under this thing. It’s a it’s a sell order that that that doesn’t that that allows the market to find a floor. So the Greenspan put put a floor under this whole thing. And then off we went. And then, of course, there was, you know, a couple other recessions, 1991. But again, more printing, 1994, little hiccup in the corporate bond market. Alan Greenspan decided, oh, I can fix that. And he implemented this thing called the sweeps program, which that gave us the whole tech bubble roaring nineties thing. Right. And then there was a long term capital management in 1998. Again, a blow up, a dumb idea, got bailed out by the Fed. Then 2000 happened. There was another bailout. Because of that bailout, we had this 1% blowout rate forever in 2000, one, two, three, four gave us this huge housing bubble that then blew up in 2007 and eight that got rescued. There was all these rescues more and more and more and more printing. And then September 2019, markets are blowing up again. Really scary moment.

[00:25:46] Fortunately for the Fed, this thing called COVID came along and allowed it to print with real abandon. So the story I want to tell you is not one. We have a little bit of policy access that needs to be worked off if or when these financial markets really begin to skim to the Dow, skid to the downside. What are we going to see? We’re going to see the possibility of that right there, systemic financial collapse because we have many decades of policy errors of too much printing. The Fed and other central banks obviously don’t want to see that happen. They’d rather not see this systemic financial collapse happen. I don’t want to see it either. Unfortunately, I’ve been calling in screaming and crying and gnashing and cajoling and trying to get people to otherwise wake up about these financial errors. But you know what? It’s really hard to do that when the party is running right after the words, people go, maybe we shouldn’t have put 70 people on the deck with with two by four supports under it. Right. That was painful when it collapsed. Right. Obviously, you’re out there going, listen, I don’t think we should have 70 people on the deck and everybody doesn’t want to hear it while the party is raging. Now, after the deck collapses and there’s a lot of injuries, then of course, people realize, yeah, we should have probably not done that. We should have listened. Well, anyway, this is what’s at risk right now. I need. You to know about it. There’s things you can do to prepare.

Dr. Chris Martenson [00:27:03] There’s things you should do to be ready for it again. As bad as COVID was in disrupting people’s lives. This if it happens. Orders of magnitude worse in its actual outcomes. So that’s what the risk is. And that’s really not something that’s controllable if or when we get to the pinching off of energy, which is the master resource. I have a whole story I got to tell you. If you haven’t seen my crash course, it’s probably one of the hardest, biggest pieces of work I’ve put together in my life. And I put it out there for everybody to see for free. Hey, check it out. You can see it for free. There’s a book around it called The Crash Course. I don’t care how you consume it, just watch the videos. Find them at Peak Prosperity Dotcom. Check it out because it’s really important concept. It’s like these energy goggles, once you put them on, you can’t see the world any other way. Once you once you get the red pill of understanding that intersection, the relationship between energy and economy, if you can put those two pieces together, forget all the complexity, forget all the different moving pieces and stocks versus bonds versus derivatives, all that. It’s irrelevant. What matters is if you understand that energy is the master resource and that the economy is actually the derivative of energy, not the other way around. Your whole world can change. You can start to see it more clearly. Things make sense. What’s happening overseas makes a lot more sense once you understand where we are in that larger energy story. Okay. What’s a related derivative concept to this? Something you need to know about?

Dr. Chris Martenson [00:28:36] I’ve been talking about these food shortages for a long time. Hey, listen, you know, Plant a Garden has been one of my little tagline monikers at the end of a lot of my videos, and the reason for that was manyfold. I think that a lot of good reasons for you to plant a garden. I’ve been talking about these food shortages for quite a while now. It’s mainstream. Now it’s become common knowledge. Remember, things move from private knowledge where you and I each know this thing. Maybe that food’s kind of an issue. Food security is an issue, and now it’s common knowledge where you can talk about it openly on a bus and people won’t turn around to look at you like you’re not even louder edge and tell you what they know. That’s common knowledge. So now we have common knowledge. I mean, look at the CNN business. They have an opinion piece by Dana Peterson saying the world is on the brink of a food shortage. Right in The Week an article just came out, the looming catastrophe of the global food shortage. And in the Deseret Review, taking that extra step, asking this food shortage by design?

Dr. Chris Martenson [00:29:36] So again, this is all now out in the airwaves. This is not obviously there’s nothing unique or new about talking about this because it’s now common knowledge. Open up any newspaper. There it is is a reminder I was hinting at and then telling you about these things way before these other people came to it, because it was completely obvious why and how this was going to come about at the time. And so be happy to tell you how I come to these conclusions, but is far ahead of that. As I was, I was way behind this. I was not prepared to see fertilizers do this because I have this. When I get it wrong, it’s because I always assume people are going to behave better than they do. That’s where I get it wrong. It shocked me that in North America, in Europe, that when fertilizer companies ran, were unable to run their operations at the input price for things like natural gas to make ammonia fertilizer, that when they ran into those shortfalls, they just said, well, we can’t make money at this. We’re just going to shut down. So they shut down their ammonia plants. They shut down their nitrogen fertilizer plants. That’s cool. That’s a business decision. Can’t fault that. If you’re going to lose money operating, you don’t operate. I get it right. Not a problem. What is a problem? Is it governments who are busy shoveling money out there to banks whenever banks need bailing out? Hey, here’s billions of dollars. You know, in the United States, when some other country needs $33 billion to conduct a war, we’re like, here you go. Why don’t you just have some of this? No money came from the governments to help these companies stay open so that fertilizer could be produced. Now, this is either malicious or really stupid. Could be either. Here’s why it’s really stupid. If you don’t produce fertilizer the way we farm industrially, you know, the you know, people say, oh, yeah, we can’t, we can’t, you know, farm organically at scale. What do you mean at scale? Industrial. Agricultural operates at scale. So industrial agriculture needs inputs all the time. Basically, it’s taken soil in, it’s converted it to dirt. Dirt is a lifeless substance. It’s a matrix. It supports roots in it, hold some water and it holds the fertilizers you dump into it. And basically a lot of farming operations now are outdoor hydroponics, if you will. You put in the input nutrients you hope the rains come or you irrigate and stuff grows. The problem with those systems are, is that when you stop those inputs, the growth stops almost immediately. This is a really big thing. How is it possible that governments allowed their fertilizer companies to shut down or suspend operations just for want of what money? What is money? It’s currency. What is that stuff we print out of thin air by the tens of billions and we culturally appropriated to whatever our stone heads are of the day. And right now we’re like, Oh, let’s make some stuff that can be blown up by some other country overseas. We got all of the money in the world for that, but keeping the fertilizer going somehow that didn’t happen. So I always assumed that they they wouldn’t be this dumb that when fertilizer shortages were showing up because fertilizer companies could not be profitably nationalized, that subsidize that, just throw them some money. Just say, listen, here you go. We’ll make up the difference. Right. You know, here’s a guaranteed price that will allow you to operate. This should not have happened because what we’re seeing, again, are price spikes here for really seeing is the underlying shortages, because demand and supply are out of balance. Demand is much higher than supply. And the way you sort of bring those back in balance is with a much higher price. So price spikes telling you we actually have fertilizer shortages. Okay. So this is actually in Bloomberg now. So when I say stuffs jumped the shark and gone into common knowledge, when Bloomberg is writing stuff like this, you best sit up and take notice. All ye find wonderful people out there. Check this out. They say here the yield outlook is even worse.

Dr. Chris Martenson [00:33:42] Elsewhere, they were talking about another country and they say Peru’s agricultural industry is facing a deficit of 180,000 metric tons of urea, which is a nitrogen fertilizer. And output of staples such as rice, potatoes and corn could tumble as much as 40% unless more fertilizer becomes available. So again, we get in high yields and we do that because we dump tons of nitrogen on there and allows the plants to grow vigorously. 40% reduction in yields every year. The world produces X amount of food and food grain staple crops and it consumes Y amount. Usually the difference between X and Y is just a few percent, 40% massive hunger and starvation on the way. If that comes to pass now, that’s pretty dire. They say here that rice. The rice. Researchers who predicted crop yields could drop 10% in the next season, meaning will be 36 million fewer tons of rice. Hey, that’s enough to feed 500 million people. Obviously, a lot of the world lives on rice and so even a 10% decline, which isn’t as bad as 40%, but even a 10% decline means 500 million people don’t have the food that they would need for a whole year. It’s a really, really big giant number in sub-Saharan Africa. Food production could drop by 30 million tons. So that’s another 100 million people that might find it a little tricky to find a meal. In yellow, quote, there’s also a growing concern less fertilizer will result in lower quality crops. Just as Gary Mill Shockey, who farms nearly 4000 acres of wheat, roughly 3000 acres of corn, while big operations in sorghum in southwest Kansas. Also chairman of the Kansas Wheat Commission, Miller Shockey, said the commission’s biggest fear this spring is that farmers may have skipped a may have past tense, skipped applying nitrogen. The wheat emerged from winter dormancy several weeks ago. If they did, it could hurt protein content of the grain and result in a lower class of wheat. And that’s a lower quality. So the quality you might still get wheat. The kernels might still be plump. But it’s going to have 20% less. Protein is going to be a less nutritious facsimile simulacrum of of of an actual kernel of wheat. This is a real thing. Like people, this is happening to all of us right now. We’re going to be missing the quantity and possibly the quality of food. So what calories are out there are also going to be less nutritious, less sustaining, less useful to us as organisms that that need to eat this stuff. So now does it begin to make sense when you start hearing all these things about how we can’t afford to eat meat anymore? I think somebody else was peering ahead to this and saying, well, if we have to feed a cow or we can feed, you know, ten more people the same grain, let’s not eat. Let’s not feed the grain to the cow. Listen, decent, decent trade off there. Possibly. But let’s just be honest about it. Let’s not say that people should eat crickets instead of cows, let’s say. We goofed. We didn’t. We farmed badly. We didn’t have a good strategy. And then we failed to, like, subsidize appropriate levels of or in otherwise nationalize appropriate levels of fertilizer production. So we didn’t do that. We goofed. Of course, that’s what the ruling class never can quite bring themselves to say, which is we goofed. Right. I get it.

Dr. Chris Martenson [00:37:02] But you kind of you knew you always knew this was coming. Right. And so here we are. So that’s why I was always saying things like plant a garden. So, yup, that’s my actual garden out there with Ivy. That’s what we do. And there’s Eevee in front of a pollinator garden. But if you look carefully, you’ll also see Peppers in there and maybe some basil. See, that’s our portrait there.

Dr. Chris Martenson [00:37:23] So what we do is we plant in zone zero. That’s called in permaculture language. Zone zero is the thing where you just come out of the kitchen, go down a few steps, and the things you want to cook with are right there. So I’ll put tomatoes in right there, whatever herbs there, plant some strawberries there, a lot of things to attract pollinators. And most importantly, it’s beautiful. So planting for beauty and function, those two things go hand in hand as far as I’m concerned. So. And then the garden is getting better and better. Every year is going to be a spectacularly good year this year. So please, if you can play in a garden. All right. You all know that food costs are speaking out after review this. I don’t have to go any further with that. So I think food inflation is even higher than that. You know, now it’s possible to take a low level grocery cart and have that be $500 of food and soon that’ll be 600 and maybe 1000 and beyond. Right. It’s happening. Look here at the FAO Food Price Index. And you can see here, you know, here’s our 2019 and 2020 and then oops, 2021 was a little higher. But look at that again, the pace of change, it’s the pace that gets you very hard to adjust to a rapid pace change. So that’s coming along. If we look at this in a longer time frame, we can see now that in real terms. Food prices have never been higher. So this is adjusted. Real terms means it’s been adjusted for inflation. We can argue over whether that inflation is undercounted, in which case the adjustment would be off. But regardless, this is a very, very high price. Food of this can lead to instability from the outside in. In the vernacular, we talk about it Peak Prosperity my tribe members know exactly what I mean. Weaker countries get hit first. That’s where you see food riots. That’s where you see restiveness. That’s where you see political dynasties toppled. The question is, how close to the center does that progress from the outside in? Now, one last picture for growing your own food. A lot of people don’t know this, but I guess many of you do. I’d be surprised. I’ll bet most of you know this, but the nutrient density of 43 agro foods measured between 1950 and 1999, this is the percent decline in nutrient density. So protein or calcium or phosphorus or iron. There’s all these things. Thiamin ribe, riboflavin, vitamin C, look at these percent declines. Like if you’re food, if you’re if you need calcium, like the amount of calcium in the food, the veggies you would buy at the store now is 15% less than it was back in 1950. So people in 1950 were eating very nutrient dense food. We talked about that quality issue where because people aren’t or farmers are putting nitrogen onto their wheat right now or hadn’t a couple of weeks ago when it was supposed to go on, they may be having less quality food coming off the back end of that. So food quality has been going down. You can control this. You grow your own food, you can add all of these various things back in, give a rich soil, medium soil, not dirt soil for your plants to grow in. And you’re now going to be eating food like they eat in the 1950s. Remember back when everybody was thin. Right. And there’s other things that aren’t going to be on your food, which are very bad, that are used in our modern industrial landscape. So as much as I’m disappointed with what I learned about our very defective health care system, our health care providers, the incentives that really disincentivize providers and health care systems from doing the right thing to actually create good outcomes for people because they were actually incentivized to create monetary outcomes. And the patients they were seeing were just events, you know, that they maximized for profit that led to a lot of bad health outcomes. Well, same thing. You’d be surprised. Maybe not. In the food industry, we’re seeing the same thing. Like this is like once you peel back this onion a little bit, you find out that a lot of the same things that happened around COVID, COVID treatments, all that you’re seeing adhere to in the food systems themselves. We’re eating food. It looks like food even tastes like food. But according to this chart, it’s increasingly not food. And look at this massive decline in riboflavin right here where it is. Right. You know, how do you get it? All of that.

Dr. Chris Martenson [00:41:51] So at any rate, by the way, I don’t have a big yard. You say I live in the city. You say, well, guess what? You can garden in very small spaces. So here’s a square foot garden. That’s it looks like five by four. That’s 20 square feet. Not that big. Lots of delicious things growing there. Looks to me like you could use a little more sunlight in that spot, possibly just based on the color of those that middle row of beans there. But we’ll see. Maybe not. And then as well, look at this vertical garden right here on a balcony. You can always get engaged with growing food wherever you happen to live in less. Unfortunately, over a north side balcony in a city or you have no balcony whatsoever. But even then, there are things you can do hydroponic little towers, the little arrays that you can grow indoors if you need to. So really get started with that. Please plant a garden. All sorts of reasons. Quality, maybe quantity of food. There’s food shortages coming. I hope these don’t get worse. But the energy shortages we’re seeing right now are speaking to the idea that there could actually be a systemic collapse of some kind that would be very bad. Not like Mad Max.

Dr. Chris Martenson [00:42:57] It’s all like breaks at 930 and Tuesday morning and then it’s like Walking Dead and Mad Max after that. Not not that. I mean, it’s just things break in there very, very hard to put back together again. And by the time they have been put back together, a few years has passed. And guess what? Hopes are dashed. Dreams are dashed, all sorts of things happen. And a lot of this can be avoided at all. It listen, it didn’t have to be this way. I didn’t like all of this was perfectly avoidable. I could see this coming. Other people can see this coming. So this level of having common sense be part of this story again. Well, if it’s not happening out there at the official levels. Right. And we’ve got, you know, some very confused officials not able to understand this stuff because they think we just pass policies, we just get a little communication and coordination between government and industry and we can solve all these things. No, you can’t solve for a primary shortage. There’s no amount of cooperation that makes a primary shortage of energy any less than what it’s going to be, which is ridiculously painful. So it didn’t have to be this way. It is. Unfortunately, the way I’m reading it right now, I think that the people in charge are going to be dummies for a little while longer, maybe forever longer. I don’t know. But as they’re being dummies, we’re going to have to live with the consequences of that, you and I. So that’s what we’re going to do. And by the way, I’m going to have part two of this about to go there. This is over at Peak Prosperity. I actually think we’re at the verge of the biggest real estate crash ever is coming. I’m going to talk about this a little bit speculative. It’s probably a little early. Hey, that’s how I roll. I tend to be early. So if you want to hear about my views on why I think there happens to be a big giant real estate crash coming, please come on by Peak Prosperity. That’s for my members only. So if you want to join up here that great. If you like conversations like this, come join. Meanwhile, please, please, please plant a garden. Get ready, because we’re going to be facing some really big shortages this year. I wish I had better news for you. All right. That’s all I have for today. Thank you, everybody, for listening. We will see you next time.

Dr. Chris Martenson [00:45:06] And for those of you who are members, I will see you at Peak Prosperity.

Dr. Chris Martenson [00:45:09] Welcome. My name is Chris Martenson and I am the CEO of Peak Prosperity. What is Peak Prosperity? Well, it’s a website now in its 14th year of operation, and it’s a place people have come to trust. It’s where you go when world events are breaking that you want to understand rapidly and more completely, perhaps, than the average person. Now, here’s what you’ll get here. Advance warning about important world events. Rich Awesome conversations where it’s actually cool. It’s okay to be well-informed, unbiased and complete information because we both know that context really matters and that we’re perhaps treated too heavily biased, ungrounded information from most media today. Fourth, membership in a great, truly awesome community of free thinkers. You will no longer feel alone or isolated because you know, the world is a complex and nuanced and wonderful and fascinating place. And it’s okay to talk about that. Listen, if you like being early to the huge unfolding events of your life and you know that you have an important role to play in how the future unfolds, then you are hereby cordially invited to join this site. Click below for the plan that best fits your needs and circumstances. And let me be the first to welcome you aboard. Welcome.